Food Trucks Are on a Roll, Despite Paperwork

NEW YORK (TheStreet) -- As a child, Susan Povich summered in Maine with her grandparents, feasting on lobster rolls and whoopie pies.

Years later, as a professional chef, she has been able to recreate the memories of her childhood by offering the same treasured foods in her Brooklyn, N.Y., Red Hook Lobster Pound.

Chef Susan Povich uses her Red Hook Lobster Pound food trucks to recreate the memories of her favorite childhood food during vacations in Maine.

Red Hook Lobster launched its first lobster roll truck in Washington, D.C., in August and now has a second truck in D.C. and a third truck coming to New York City in a few weeks. The trucks change their locations daily and sometimes hourly, depending on the parking spots available.

That doesn't seem to be a problem, though. Customers find the trucks and will wait as long as two hours to get a lobster roll, she says.

"People will seek us out," Povich says. "We have a very unique product and probably one of the best ones. So I can park a couple of blocks off the main path and I will have enough traffic to find me."

Food trucks aren't new, but their popularity has grown tremendously in the past few years. The lower cost of entry has allowed chefs and restaurant industry insiders to experiment with gourmet-style street food, particularly since the recession all but halted accessible financing for small businesses.

"The restaurant will never die. This has become an offshoot option for people to have a different level of satisfaction," says Derek Hunt, co-owner of two New York City Cake & Shake food carts selling organic cupcakes, milkshakes and select hot lunches.

It's an increasingly popular one. Sales in the mobile caterers segment (in which many food trucks fall), is projected to grow by 3.6% this year, to $630 million, according to the National Restaurant Association, which rated food trucks and pop-up restaurants the top restaurant operational trend this year in an October survey.

The sub-sector is becoming so popular that the association is devoting an area at its annual trade show in late May to mobile food service, spokeswoman Annika Stensson says. The Food Truck Spot is to educate attendees on everything they need to start a food truck, from vehicle purchase to kitchen equipment.

For restaurant entrepreneurs, food trucks provide "opportunities to venture into the restaurant business or expand current concepts at relatively low cost," Stensson writes in an email. "The startup cost for a truck is typically well below that of a bricks-and-mortar restaurant."

Part of the appeal for customers is the "affordable price points for quality meals, the convenience of them coming to you (or at least close to your location), and the fun aspect of social media interaction," Stensson writes in an email.

Food trucks are also forming communities, including with competitors, in New York, Washington and Chicago to address local laws and regulations on mobile vending.

Red Hook Lobster formed the NYC Food Truck Association to work with a lobbyist to update some of the outdated New York City parking regulations, Povich says. Paperwork in some cities, including Los Angeles and Washington, is easier to deal with; cities such as New York can be daunting.

New York City's Department of Health and Mental Hygiene oversees food truck vendor permits and licenses. A permit goes to the cart or truck itself, like in a car registration, with one permit per cart or truck. Mobile food vendors may have more than one license, though, says a spokeswoman for the department. They're comparable to a driver's license and means you can work at a permitted cart.

The number of permits is capped under the city's administrative code -- just 3,100 for two-year permits and 1,000 for six-month seasonal permits valid from April 1 through Oct. 31, according to the health department. The city allots another 1,000 permits for so-called green carts, those selling fresh produce. Povich estimates a permit waiting list of roughly 4,000; the city did not provide figures.

Collecting specific data in general has proven a challenge. For instance, if a restaurant launches a truck, sales from that truck would be counted into the restaurant's total sales and thus fall into the so-called quick-service or full-service segment, Stensson writes. Additionally, many mobile vendors don't have employees, so data cannot be collected that way.

Matt Geller, CEO of the Southern California Mobile Food Vendors Association, says Los Angeles is the "epicenter" of the food truck phenomenon because it does not have the same restrictions for mobile food vendors as New York.

It's one reason why L.A. led the way in food truck innovations. In the past most L.A. food trucks were akin to the Mexican taco vendors, Geller says, but Kogi re-set the standard in 2008-09 by offering cheap fusion Korean barbecue and Mexican dishes and using Twitter to alert customers where they would stop each day.

"There are some trucks that don't have a lot of Twitter followers and rely more on being at the right place," Geller says. "They're never going to do as well as the ones that have Twitter."

It's important for food truck owners to expect the unexpected, Hunt says.
The ability to be flexible and to be "light on your toes" is imperative when running a food truck or cart, says Cake & Shake co-owner Derek Hunt.

Cake & Shake's original cart was in Washington Square Park (the second is in front of the Metropolitan Museum of Art) but is becoming a roaming city cart -- of course requiring a new permit -- as a result of continued construction in the famous park and disappointment in results there.

"That location has not turned out to be what we intended. That location goes in ebbs and flows, and what we need is something a little more consistent. We're going to reposition ourselves and have another cart moving around town that it can be in significant revenue-generating areas," Hunt says.

Traditional business models are unlikely to succeed in this unique industry, and it's important to be flexible.

During one winter blizzard, Hunt decided he was indeed going to open the next day. Instead of using his van to carry products to the cart, he shuttled food products with his four-wheel drive vehicle.

"I was the only cart probably in New York City," he says. "I didn't see anyone else that day, and we made a killing because every child was out of school and every adult was out of work and everyone wanted a hot cup of coffee."

It's also important to think about image, Hunt says -- he explains his own company's brand as "very lighthearted, very approachable ... to connect to people's inner child" -- but having an excellent product is the priority.

That's a lesson that resonates.

"I have to stress to anybody that is doing a food truck it's all about the food," Povich says. "If you don't have a fabulous product and something different, you're not going to get good reviews. You're not going to get 20,000 Twitter followers or bloggers busting over each other to write about you."

"I'm a professional chef. I'm not making fancy food now, but what I make is the best. I spent an entire month figuring out what my mayonnaise recipe was going to be," she says. "Plenty of people are going to go out there and start a truck and they're going to fail because it wasn't about the food."

Povich has big growth plans for her lobster roll truck and would like to eventually start a franchising system to open outposts along the Eastern Seaboard and in the Midwest, she says.

"I am trying to take our success and enable people to be successful with it in other places, adding their own spin to it," Povich says.

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